An early morning report from Bloomberg Businessweek says AIG may be considering giving the US government a position in mortgage bonds to repay a portion if its Federal bailout debt. Ironically, this stake would be in the same “toxic assets” that nearly collapsed the large insurer.

This report is being whispered by unnamed sources close to the potential AIG/US government deal.

The mortgage bonds being considered in this trade would be assets in Maiden Lane II and Maiden Lane III, special purpose entities created in 2008 during efforts to get these impaired mortgages of the New York-based insurers balance sheet.

AIG’s CEO, Robert Benmosche, has already publicly disclosed portions of the companies strategy to repay the $182.3 billion bailout. AIG expects to sell off stakes in two non-US life insurance divisions to retire a portion of their Federal Reserve line of credit. However, this still leaves billions owned to the US Treasury.

The US already has a nearly 80 percent stake in the troubled insurer as a result of the 2008 bailout.

AIG contributed nearly $6 billion to the Maiden Lane entities and is entitled to profits from the entities, following the repayment of the nearly $40 billion loaned to it by the Federal Reserve. AIG is reporting that it has booked a $751 million gain in Maiden Lane III in the first quarter.

However, skeptics think that this rebound is entirely fueled by the Federal Reserves current policies in supporting the mortgage bond market.

There are other market indications that the entities may hold considerable value. Again, unnamed sources in the US Treasury say that there is consideration for the proposal as they believe there is value in the entities, particularly the Maiden Lane III entity. In addition, Black Rock, Inc., who manages the portfolios on behalf of the New York Federal Reserve, elected to keep most of the assets and collect the payments rather than sell them below face value.

As for ongoing AIG company strategy, Benmosche is said to be refocusing the insurer back on its historical competencies–global property-casualty coverage and US life and retirement products.

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